Before a Federal Magistrate Judge, subcontractor Ratliff, Inc. (defendant and counter claimant) moved to compel arbitration under a provision of the prime contract that was incorporated by reference into the subcontract between plaintiff and defendant. Plaintiff, Dobson Brothers Construction, argued that the motion must be denied because neither the subcontract nor the prime contract contained an express agreement to arbitrate disputes.
The Magistrate held that, although the subcontract made no mention of arbitration or alternative dispute resolution, a clause in the prime contract which had been incorporated into the subcontract was binding and enforceable by Ratliff as a party to the subcontract. The court noted that Ratliff was not asserting claims as a third party, but rather as a party to the subcontract that was naturally anticipated by the prime contract.
Interpreting the language of the provision at issue, the Magistrate held that “based on the generally accepted description and definition of ‘arbitration,’” an agreement to submit disputes to a neutral forum for “hearing and decision” by “arbitration” refers to a binding arbitration process. Thus, the Magistrate recommended that the Motion to Compel Arbitration be granted. Dobson Brother Constr. v. Ratliff, Inc., Case No. 08-3103 (USDC D. Neb. Nov. 6, 2008).